Accountants for garages and car repair workshops: the short answer
Last updated: 14 October 2026
Garages, MOT centres and repair workshops need accountants who understand parts stock, mixed VAT on labour and parts, staff payroll and, for those who sell cars, the VAT margin scheme. Accotax provides fixed-fee accounts, VAT returns, payroll and tax planning for independent garages and workshops.
For self-employed mobile mechanics, see our main accountants for mechanics page.
Accounting challenges for garages
- Tracking parts stock and work in progress at the year-end
- Separating labour, parts and MOT fees on invoices; the MOT test fee is outside the scope of VAT
- Cash and card takings that need daily reconciliation
- Expensive equipment such as ramps, diagnostic tools and MOT bays
- Employee technicians, apprentices and overtime payroll
Selling used cars: the VAT margin scheme
If you buy used cars from private sellers and sell them on, the second-hand margin scheme lets you charge VAT only on your profit margin, not on the full sale price. You must keep a stock book and the right documents for every vehicle. Get the scheme wrong and HMRC can charge VAT on the full price.
Tax savings for garage owners
Capital allowances
Workshop equipment, ramps and diagnostic machines usually qualify for the Annual Investment Allowance, which gives 100% relief on up to £1 million a year.
Vans and recovery vehicles
Vans usually qualify for the AIA. A car does not, but a new zero-emission car may qualify for a 100% first-year allowance.
Employment Allowance
Garages with staff can usually cut their employer NIC bill by up to £10,500.
Our services for garages
- Bookkeeping in Xero or QuickBooks, linked to garage management systems
- VAT returns, including margin scheme records
- Payroll and auto-enrolment for technicians
- Year-end accounts and corporation tax or Self Assessment returns
- Advice on salary and dividends for limited company owners
Frequently asked questions
Is VAT charged on MOT fees?
No. The statutory MOT test fee is outside the scope of VAT, but repair work done at the same time is standard-rated.
Can I claim my work clothes and boots?
Protective clothing and uniforms are allowable. Everyday clothing is not.
Should my garage be a limited company?
It often saves tax once profits are higher, but there is more admin. We compare both options.
Do you work with franchise workshops?
Yes, and with independent garages throughout the UK.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with accounts for your garage. See our accountants for mechanics service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.